Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing

 
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
বাংলােদেশর unয়েনর sাধীন পযর্ােলাচনা

           Virtual Media Briefing

Health and Economic Risks of Corona
 Pandemic and Recommendations

             Dhaka: 21 March 2020

                 www.cpd.org.bd
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
CPD IRBD 2020 Team

Lead contributions were provided by Dr Fahmida Khatun, Executive Director;
Professor Mustafizur Rahman, Distinguished Fellow; Dr Khondaker Golam
Moazzem, Research Director; and Mr Towfiqul Islam Khan, Senior Research
Fellow, CPD.
Excellent research support was received from
                                    Senior Research Associates
              Mr Mostafa Amir Sabbih                                   Mr Muntaseer Kamal
                  Mr Md. Al-Hasan                                     Mr Syed Yusuf Saadat
                                       Programme Associates
     Mr Abu Saleh Md. Shamim Alam Shibly                                Ms Nawshin Nawar
                  Mr Tamim Ahmed                                       Mr Md Jahurul Islam
               Ms Iqra Labiba Qamari
                                                 Interns
               Ms Fariha Islam Munia                                    Ms Samanta Islam

Mr Towfiqul Islam Khan was the Coordinator of the CPD IRBD 2020 Team.
CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                 2
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Acknowledgements

The CPD IRBD 2020 Team would like to register its profound gratitude to Professor Rehman
Sobhan, Chairman, CPD for his advice and guidance in preparing this report.

The CPD IRBD Team also expresses its sincere thanks to Dr Debapriya Bhattacharya
Distinguished Fellow, CPD for his inputs and support.

The Team gratefully acknowledges the valuable support provided by the Dialogue and
Communication Division, CPD in preparing this report. Contribution of the CPD
Administration and Finance Division is also highly appreciated. Assistance of Ms Tahsin
Sadia, Executive Associate is particularly appreciated.

Concerned officials belonging to a number of institutions have extended valuable support to
the CPD IRBD Team members. In this connection, the Team would like to register its sincere
thanks to Bangladesh Bank (BB), Bangladesh Bureau of Statistics (BBS), Bangladesh
Investment Development Authority (BIDA), Dhaka Stock Exchange (DSE), Export Promotion
Bureau (EPB), Ministry of Finance (MoF), National Board of Revenue (NBR), and Planning
Commission.

The CPD IRBD 2020 Team alone remains responsible for the analyses, interpretations and
conclusions presented in this report.

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations              3
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Contents

 Section 1: Introduction
 Section 2: State of the Global Economy in view of the Coronavirus Crisis
 Section 3: Transmission Channels for the Bangladesh Economy
 Section 4: Current State of Bangladesh Economy in view of the
  Coronavirus Crisis
    Section 4.1: External Sector Performance
    Section 4.2: Disruption of Supply Chains in Major Economic Activities
    Section 4.3: Healthcare
    Section 4.4: Public Finance
    Section 4.5: Monetary Policy
 Section 5: Policy Recommendations

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations         4
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Section 1:
                                     Introduction

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   5
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Introduction

 In view of the COVID-19 emergency, it is important for Bangladesh to be
  appropriately ready and to take necessary preparations to deal with both
  immediate and medium term ramifications of this outbreak at the earliest
 COVID-19 is going to have serious implications for health sector preparedness
  and macroeconomic management of Bangladesh
 This has important implications for reprioritisation, resource reallocation and
  fiscal-monetary policies and measures to be pursued by Bangladesh to near and
  medium terms
 As Bangladesh prepares for the upcoming budget for fiscal year (FY) 2020-21, it
  is important to understand the extent of resource requirement for healthcare
  and economic management
 To this end, the Centre for Policy Dialogue (CPD) has undertaken the current
  exercise which mainly addresses two broad issues: (i) what are the transmission
  channels of the COVID-19 outbreak that may have impacts on the economy?
  (ii) what can the policymakers do to overcome the challenges of COVID-19?

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations             6
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Introduction

 According to World Health Organisation (WHO), coronaviruses (CoV) are a
   large family of viruses that cause illness
 Such illness range from the common cold to more severe diseases such as
   Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute
   Respiratory Syndrome (SARS-CoV)
 Coronavirus disease (COVID-19) is a new strain that was discovered in 2019
 Coronaviruses are zoonotic, meaning they are transmitted between animals
   and people
 Though previously there have been many pandemics, those were region
  specific
 They were also found mostly in less advanced countries
 Coronavirus has hit all types of countries
 Coronavirus is found to be one of the most dangerous and disruptive
  disease so far in human history

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations             7
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Introduction

 On 8th December 2019, there was onset of symptoms in the first known case of
  pneumonia with unknown etiology in Wuhan City, Hubei Province, China
 On 31st December 2019, China reports a cluster of cases of pneumonia with
  unknown etiology in Wuhan to the WHO. China reported 27 cases and 0 deaths at
  that point in time
 On 7th January 2020, Chinese scientists identify the pathogen as a novel
  coronavirus
 On 30th January 2020, WHO declared a “public health emergency of international
  concern”. At that time, China reported 7736 conformed cases and 170 deaths.
  Outside China, 82 confirmed cases were found, but no deaths
 Since then the coronavirus also known as COVID-19 has spread at a rapid speed
 As of 20 March 2020, the coronavirus COVID-19 has affected 178 countries
  and territories around the world with 244,282 coronavirus cases, 10,006
  deaths and 87,407 recovered cases
 WHO announced COVID-19 outbreak a pandemic on 12 March 2020
  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations             8
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Introduction

 COVID-19 pandemic is apprehended to have serious health and economic
  implications
 This is considered to a global health and societal emergency that requires
  effective immediate actions by governments, the private sector and
  individuals
 In Bangladesh, 20 cases were detected, 1 death and 3 recovered cases as of
  20 March 2020
 Given the nature of the disease it is unpredictable as to what will be the
  nature and extent of health and economic losses
 International  organisations have made preliminary estimations on
  economic losses. However, the impact will depend on the duration of the
  diseases and the type of remedial measures taken to tackle the disease

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations             9
Health and Economic Risks of Corona Pandemic and Recommendations - Virtual Media Briefing
Introduction

 We have looked into the implications of COVID-19 on the Bangladesh
  economy at two levels: from global to national, and, at the national level
 While looking into the transmission channels of the impact, we have
  looked into five sectors which are critically important for Bangladesh
  economy. These are:
       External Sector Performance

           Disruption of Supply Chains in Major Economic Activities

            Healthcare

           Public Finance

       Monetary Policy

 In view of the emergent scenario, CPD has proposed a set of policy
  initiatives and measures to address attendant implications
CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations            10
Section 2:
State of the Global Economy in view of the
             Coronavirus Crisis

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   11
State of the Global Economy

 The impact of COVID-19 is apprehended to be unprecedented and will have
 lasting economic damage on the global economy
 Before COVID-19 outbreak in January 2020, it was predicted that the global
 economy will grow at 2.7% (UNCTAD calculation based on IMF, WEO). These
 numbers have been revised downward
 IMF earlier had projected that global economic growth is expected to rise
 from 3.0% in 2019 to 3.3% in 2020 and 3.4% in 2021
 However, IMF has now made a downward revision of 0.1 percentage point for
 2019, 1.7 percentage point for 2020 and 0.2 percentage point for 2021
 compared to those predicted in the October 2019 (3.0% in 2019, 3.3% in
 2020 and 3.4% in 2021) issue of the World Economic Outlook (WEO) report
 of the IMF

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations    12
Economic Outlook

            Economic outlook of selected countries (GDP Year on Year growth in %)

                                     2019                                              2020                    2021
                                                            2019                                  2020                      2021
                                   (Revised                                          (Revised                (Revised
Region/Country                                           (Previous,                             (Previous,              (Previous,
                                    March                                             March                   March
                                                         Oct. 2019)                             Oct. 2019)              Oct. 2019)
                                    2020)                                             2020)                   2020)
World                                   2.9                     3.0                     1.6        3.3          3.2        3.4
USA                                     2.3                     2.4                     0.7        2.0         0.9         1.7
Eurozone                                1.2                     1.2                    -0.1        1.3          1.2        1.4
    -Germany                            0.6                     0.5                    -0.3        1.1          1.1        1.4
     -France                            1.3                     1.2                    0.3         1.3          1.4        1.3
       -Italy                           0.2                     0.0                    -1.6        0.5          0.7        0.7
      -Spain                            2.0                     2.2                     0.7        1.6          1.1        1.6
United Kingdom                          1.4                     1.2                    0.3         1.4         -0.3        1.5

China                                   6.1                     6.1                     2.4        5.8         5.9         5.8
Japan                                   0.8                     0.9                    -0.4        0.5         1.3         0.5
India                                   5.3                     6.1                     5.3        7.0         6.4         6.5
Brazil                                  1.2                     0.9                     1.8        2.0         2.4         2.3
Australia                               1.8                     1.6                     1.2        1.6         2.3         1.6
Source: Macrobond, IMF, RaboResearch & IMF World Economic Outlook (March 10, 2020)

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                   13
Possible Economic Losses
                                                                                               due to COVID-19

 Comparative scenario of possible economic losses due to COVID-19 by the
 different organizations

                                                                                         Europe                  Asia
                                     World                      World                         World                  World
                                                                                     World               World
  Organisation                      GDP loss                  trade loss                       trade                 trade
                                                                                    GDP loss            GDP loss
                                      (%)                    (% of GDP)                       loss (%               loss (%
                                                                                      (%)                 (%)
                                                                                             of GDP)                of GDP)
    UNCTAD                                 1.7                        0.6             0.4       0.3       0.2

        OECD                               2.4                        1.0             0.7       0.3       0.3           -

         ADB                               0.2                       0.40             0.6       0.5       0.01          -

         IMF                               1.6                        0.3             0.1       0.7       0.2           -
    Source: Compilation from the published reports of the mentioned organizations

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                               14
Global Economic Growth Slowdown

                                  2019        2020 (Old Forecast)      2020 (New Forecast)

                        7.0
                                                                            6.1
                        6.0                                                       5.8
  Real GDP Growth (%)

                                                                                        4.9
                        5.0

                        4.0
                              2.9 2.9
                        3.0
                                        2.4   2.2 2
                                                    1.9
                        2.0
                                                             1.1 1
                        1.0                                          0.7                      0.7 0.6
                                                                                                        0.2
                        0.0
                               World              US         Euroarea            China         Japan
Source: OECD Economic Outlook Report (March 2020)

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                15
Global Stock Market Scenario

                 Shanghai Stock Exchange Composite
                                                                         UK FTSE 100 Stock Market Index
                 Index
                                                               8000
     3400
                                                               7500
     3200
                                                               7000
     3000                                                      6500

     2800                                                      6000
                                                               5500
     2600
                                                               5000
     2400
             Nov'18

             Apr'19

             Nov'19
             Sep'18
              Oct'18

             Dec'18

             Sep'19
              Oct'19

             Dec'19
            May'19
            June'19

             Jan'20
             Feb'20
            Mar'20
             Aug'18

             Aug'19
             Mar'19

             July'19
             Jan'19
             Feb'19

                                                                               Italian FTSE MIB Index
                 US Dow Jones Index Industrial Average value
        29827                                                    25000

        27827                                                    23000

        25827                                                    21000

        23827                                                    19000

        21827                                                    17000

        19827                                                    15000

Source: Trading Economics

   CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                           16
Economic Impacts of COVID-19

 It is apprehended that the impact of COVID-19 and the global economy can
  be severe and the global economy may fall into recession through the
  following channels:
 Direct impact on production: The slowdown in China will have impact
  on exporters to China
 Supply chain and market disruption
 Most of the manufacturing firms are highly dependent on the imported
  intermediary inputs from China.
 Many large companies rely on the sales in China to achieve their financial
  targets
 Financial impact on firms and financial markets
 Disruption of inputs and production may put a pressure on some firms;
  particularly, the companies with inadequate liquidity will be under stress.
 There might be the possibility for the firms to reduce their engagement in the
  equity and corporate bond market due to the uncertainties happened by the
  outbreak.

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   17
Economic Impacts of COVID-19 (Cont.)

 Major areas of impact: tourism, disruption in retail due to decline in
  consumption & demand, e-commerce may boost, supply chain disruptions
  hurt telecom and technology, automotive production stalled, energy sector is
  vulnerable, windfalls for pharma but challenges around
 The effect of this outbreak is still uncertain and evolving continuously as
  more and more cases are found in more and more countries
 The impact will depend on the duration of the outbreak, number of affected
  people and countries, and the lethality of the outbreak
 Global community has called for a coordinated policy actions to address the
  ramifications of COVID-19
 Initiatives such as “World Economic Forum COVID-19 Action Platform” are
  needed to enhance business support and protect the livelihoods of people

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   18
Relief Packages of
                                                                           Different Countries

          The People’s Bank of China has cut down on bank reserve requirement to make $79
CHINA     billion available for lending purposes to companies that have been suffering due to the
          crisis (QUARTZ, 18 March, 2020)

          The 25 billion euro worth economic support package has been authorised to support
ITALY     companies and workers. Extra funding will be allocated to the healthcare system as well
          cater to increasing unemployment benefits, freezing tax and loan payments to prevent job
          losses. (QUARTZ, 18 March, 2020)
          A stimulus package worth of $219 billion is to be allocated for virus aid out of which $110
SPAIN     billion will be provided by the government to companies to protect them during the
          lockdown (Bloombeerg, 17 March, 2020)

          The government had announced a $9.8 billion of emergency funding to shield the impact
SOUTH     of the crisis on the economy. Additional funds will be provided in the form of treasury
KOREA
          bonds and limitations have also been imposed on short-selling transactions (REUTERS, 16
          March, 2020)

          A total of 45 billion euros has been approved to aid companies and employees. The
FRANCE    government is also being lenient towards companies in terms of social charges and tax.
          Sate-subsidised work schemes is also being implemented temporarily (QUARTZ, 18 March, 2020)

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                   19
Relief Packages of
                                                           Different Countries (Cont.)

        The government in Berlin has decided to compose a stimulus package worth of 550
GERMANY billion euros and offer unlimited credit to cushion companies against any backlash
             (France 24, 13 March, 2020)

             The government has asked IMF for $5 billion for emergency funding and a concrete
IRAN         relief package catering to containing the crisis is yet to be announced (REUTERS, 12 March,
             2020)

             The president has signed an emergency aid package of $100 billion which would also
USA          ensure paid sick leaves and fee testing. Policies surrounding tax payment are being
             relaxed. Grants to support the airlines industry, small business are being seriously
             considered to be incorporated in the stimulus package (abc News, 19 March, 2020)

             The government of UK has assembled a package of 300 billion pounds to offer state-
             backed loans to businesses. Small entities operating in retail, hospitality and leisure
UK           would be able to apply for up to cash grants of up to 25,000 pounds. Officials had also
             announced a 30 billion pounds of emergency spending (11 March) that would go to
             National Health Service (NHS), sick pay for employees, etc. (The Telegraph, 17 March, 2020)

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                     20
Section 3:
             Transmission Channels for the
                 Bangladesh Economy

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   21
Transmission Channels for the Bangladesh
                                          Economy: Global Level

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   22
Transmission Channels for the Bangladesh
                                Economy: Domestic Uncertainties

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   23
Section 4:
Current State of Bangladesh Economy in
    view of the Coronavirus Crisis

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   24
Section 4.1:
               External Sector Performance

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   25
COVID-19 and the
                                                   External Sector of Bangladesh

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   26
COVID-19 Affected Countries
                                   and Bangladesh’s Export Destinations

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   27
COVID-19 and Destination
                                                              of Major Export Items

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations     28
COVID-19 Affected
                                                   Countries and Import Sources

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   29
COVID-19 Affected
                                          Countries and Remittance Sources

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   30
External Sector Performance Scenario

 COVID-19’s adverse implications are being felt at a time when Bangladesh's
 external Sector is under considerable pressure in several fronts:
   Export target for FY2020 (12% growth) is highly unlikely to be attained in
     view of the negative growth over the first eight months of FY 2020 (-4.8%)
   Major export items such as knitwear (-5.7%), woven wear (-5.9%), home
     textile (-7.5%), frozen fish (-4.4.%) and leather and leather products (-
     9.1%) posted negative growth
   Import growth over the first seven months of FY2020 was negative (-2.7%)
   Important import sub-components such as intermediate goods (-2.1%) and
     capital goods (-8.3%) including capital machineries (-22.0%) posted
     negative growth

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   31
External Sector Performance Scenario

 Remittance sector however registered positive growth in terms of robust
    growth of inflows over first seven months (+21.5%), and a rise in numbers
    of migrant workers going abroad (+4.2%)
 During first six months of FY 2020, the negative trade balance (-8.2 billion
    US$) and services balance (-1.7 billion US$) could hardly be balanced by
    the positive secondary income (rising to +9.6 billion US$ thanks mainly to
    remittance) and declining financial account (falling to +1.8 billion US$)
 As a consequence, overall BoP position in December 2019 (+0.027 billion
    US$), while somewhat better than December of the previous year (+27.0
    million compared to – 513.0 million US$), remained weak

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   32
Implications of COVID 19
                                                 on External Sector Performance

 Already export sector has started to feel the adverse effects of COVID 19
   Supply chain of key sectors such as RMG got disrupted: particularly in the initial
      period because of snags in import of raw materials from China (Yarn: more than
      half; synthetic yarn: two-thirds; fabrics: three-fourths), as also of assembling plant
      including electric equipment (more than half)
   Exports are being negatively affected both from import side particularly from
      China and export side: backward and forward supply chains disrupted; execution
      of orders delayed; shipments deferred; L/C payments facing problems; business
      travels halted; uncertainties as regards future demand
   The likely adverse effects of a global recession on demand for export, further
      accentuating current negative performance
   While the fall in oil and consequently commodity prices could help Bangladesh, on
      account of lower import payments, and also lower domestic demand, resulting in
      arresting further weakened of BoP scenario, this could lead to a low-level
      equilibrium with consequent negative implications for investment, trade-related
      activities and in the final analysis in slowing down the pace of GDP growth
  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations           33
Section 4.2
    Disruption of Supply Chains in Major
            Economic Activities

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   34
Immediate Impact on Major
                                          Supply Chains: Newspaper Reports

Immediate Impact in different sectors/activities
• Agriculture sector: export of crab & eel, supply of onion, garlic & ginger,
  prices of spices, lentil, pepper, turmeric, sugar & palm oil

• Manufacturing sector: Finish leather and leather goods; garments
  accessories and packaging, pharmaceuticals, cosmetics and toiletries, woven
  and knit industry, live and chilled food, plastic, electrical merchandise
  manufacturers industry, jute spinners industry, medical instrument and
  hospital equipment, eyeglass, computer & computer accessories, electronics,
  jute spinning, medical instrument and hospital equipment

• Services sector: travel & tourism- airlines, air cargo carriers, tourists,
  hotel, MICE (meetings, incentives, conferences and events)
   • Wholesale & retail trade- sales of non-essential products such as
      electronics, garments, leather goods, shoes & furniture

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   35
Prices of Food Products

                                                                                         Rise in retail prices in Dhaka city between Dec 15, 2019 to March 14, 2020
80   72.41
70

60

50
                                          39.29
40
                                                                           30.43
30
                                                                                                                  20.45
20                                                                                                                                               14.04              13.33     12.12              11.11                9.46             9.46             7.25                              7.25
10                                                                                                                                                                                                                                                                                                        6.52               6.52               6.51                   6.51                   6.48   6.25          4.55        2.94                              2.04            1.59                            1.59
0

                                                                                                                                                                                                                      Palm oil Super

                                                                                                                                                                                                                                       Palm oil Super
                                                                                                                  Mung Bean/ Moog Dal (Quality

                                                                                                                                                                                                                                                                                                                                                                                              Beaf
                                          Lentil (Turkey/ Canada- Medium

                                                                                                                                                                               Cardamom/ Elach

                                                                                                                                                                                                                                                                                                          Palm oil (loose)

                                                                                                                                                                                                                                                                                                                             Palm oil (loose)
                                                                            Lentil (Turkey/ Canada- Large Size)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Rice (Medium)
                                                                                                                                                                     Mutton

                                                                                                                                                                                                                                                                                          Atta (Packet)

                                                                                                                                                                                                                                                                                                                                                                                                     Hilsha Fish
                                                                                                                                                                                                  Chicken (Broiler)

                                                                                                                                                                                                                                                                                                                                                                                                                   Thin rice

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Soy bean oil (Bottle 5 litre)

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Soy bean oil (Bottle 5 litre)
                                                                                                                                                                                                                                                        Rice Thick (Sarna/ China/ Irri)
                                                                                                                                                  Cotton Fish/Rui
      Garlic (Imported) Quality basis

                                                                                                                                                                                                                                                                                                                                                                                                                               Garlic (Domestic) Quality basis
                                                                                                                                                                                                                                                                                                                                                Soy bean oil (Loose)

                                                                                                                                                                                                                                                                                                                                                                       Soy bean oil (Loose)
                                                                                                                             basis)
                                                        Size)

 According to TCB, changes in retail prices of food products in Dhaka city during December, 2019
     and March, 2020 have experienced two opposite trends.
                                         Major rise in prices was happened in case of garlic (70%), lentil (39%), fish (14%), mutton
                                                     (13%), chicken (11%), palm oil (9.5%), rice (7%), packed atta (7%) and soy bean oil (6.5%):
                                                     Slowed down of import and/or low level of supply of domestic production may cause this
                                                     rise.
     CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                                                                                                                                                                                                                                                                                                                                                                                36
Prices of Food Products (Cont.)

                         Decrease in retail price in Dhaka city between Dec 15, 2019 and March 14, 2020
  0

       -2.13             -2.50          -2.56
                                                           -4.76                            -4.76
 -10                                                                                                                         -6.67
                                                                                                                                                  -9.68 -10.53
                                                                                                                                                               -11.76 -12.50
                                                                                                                                                                                                                                -14.29 -14.81
                                                                                                                                                                                                                                              -15.58
 -20
                                                                                                                                                                                                                                                                                                  -20.00
                                                                                                                                                                                                                                                                                                                          -21.43
                                                                                                                                                                                                                                                                                                                                                -25.71 -26.83
 -30

                                                                                                                                                                                                                                                                                                                                                                                 -31.82

 -40
                                                                                                                                                                                                                                                                                                                                                                                                      -40.00

 -50                                                                                                                                                                                                                                                                                                                                                                                                             -48.00
                                                                                                                                                                                                                                                                                                                                                                                                                               -50.00
                                                                                                                                                                                                                                                                                                                                                                                                                                                    -55.00
 -60
                                         Cloves/ Lobongo

                                                                                                                                                                                                                                 Coriander/ Dhonia pata

                                                                                                                                                                                                                                                                                                                                                                                                                                                      Onion
                                                                                                                                                                                                                       Garlic

                                                                                                                                                                                                                                                                                   Flour (Open)

                                                                                                                                                                                                                                                                                                                                                              Turmeric (Holud)

                                                                                                                                                                                                                                                                                                                                                                                   Onion (Domestic)
                                                                                                                              Atta White (Open)

                                                                                                                                                                                                                                                                                                                                                                                                                                 Onion (Imported)
                                                                                                                                                                                                          Anchar Dal

                                                                                                                                                                                                                                                                                                                                                 Red Lentil
                          Cumin/ Jira

                                                                                                                                                   Chickpea/ Chola (Quality Basis)

                                                                                                                                                                                                                                                                                                    Cinnamon/ daruchini
        Flour (Packet)

                                                            Soy bean oil (Bottle 1 litre)

                                                                                             Soy bean oil (Bottle 1 litre)

                                                                                                                                                                                     Chicken (Domestic)

                                                                                                                                                                                                                                                          Ginger (Quality basis)

                                                                                                                                                                                                                                                                                                                            Bay leaf/ Tejpata

                                                                                                                                                                                                                                                                                                                                                                                                        Potato

                                                                                                                                                                                                                                                                                                                                                                                                                   Dry Chili
 Major decline in retail prices occur in case of onion (-55%), dry chilli (48%), potato (-40%),
  turmeric (-26%), ginger (-14%): Rise in the supply of domestic production and import from
  different sources (China plus) are likely to contribute in slowing down the retail prices.
  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                                                                                                                                                                                                                                                                                                                      37
Import of Food, Intermediate Goods & Capital
                              Machinery (July-Jan of FY 19 & FY20)

              Changes in Import of Food and Consumer Goods (MoM) during
 500                               FY2019 and FY2020
 400
 300
 200
 100
   0
-100
-200
             1. Rice         2. Wheat           2. Spices        3. Edible oil    4. Pulses (all   5. Sugar
                               Jul     Aug      Sep     Oct     Nov      Dec     Jan sorts)

 Import of food and consumer goods experienced variation at a limited scale after the
  outbreak of coronavirus in December, 2019.
        China is not the main source of import for most of the food products. Import from China
         and other sources have contributed to less variation during these months.

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                          38
Import of Food, Intermediate Goods & Capital
                                  Machinery (July-Jan of FY 19 & FY20)

 Import of intermediate goods and capital machineries experienced more fluctuation
  during this period
     China the main source of import for most of those products. Restrictions in import from
           China have contributed to high variation.

                     Changes in Import of Intermediate Goods and Capital Machinery (MoM) during FY2019 and
     200
                                                              2020
     150
     100
      50
       0
     -50
    -100

                                                                                                                                                                                  11. Yarn
                                                                                                                                                                10. Raw cotton
                                                3. POL

                                                                                                                                                                                                                                                                                  Capital machinery
              1. Clinker

                                                         5. Chemicals

                                                                                                            7. Fertilizer

                                                                                                                                                                                             12. Textile and articles thereof

                                                                                                                                                                                                                                13. Staple fibre

                                                                                                                                                                                                                                                   14. Iron, steel & other base
                                                                                                                              9. Plastics and rubber articles
                           2. Crude petroleum

                                                                              6. Pharmaceutical products

                                                                                                                                                                                                                                                             metals
                                                                                                                                         thereof

                                                                        Jul               Aug              Sep              Oct                        Nov        Dec            Jan

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                                                                                                                                                                        39
Major Sources of Import of
                                                                                          Food and Agricultural Products
                                                                                                                  Product: 06
                                                                                              Product: 04
                                                                                                                 Live trees and
                                                                                            Dairy produce;                           Product: 07        Product: 08
                      Product: 02                                                                                 other plants;                                           Product: 09
                                                          Product: 03                         birds' eggs;                             Edible           Edible fruit
Product: 01 Live       Meat and                                                                                 bulbs, roots and                                          Coffee, tea,         Product: 10
                                           Fish and crustaceans, molluscs and other         natural honey;                         vegetables and      and nuts; peel
   animals            edible meat                                                                                 the like; cut                                            maté and              Cereals
                                                     aquatic invertebrates                 edible products                          certain roots      of citrus fruit
                         offal                                                                                    flowers and                                               spices
                                                                                           of animal origin,                         and tubers          or melons
                                                                                                                  ornamental
                                                                                           not elsewhere ...
                                                                                                                     foliage
                                                                                             New Zealand
 France (24.5)        India (82.6)                        Myanmar (41.6)                                         Viet Nam (51.8)   Australia (47.5)     China, 46.5      India (33.71)        India (23.92)
                                                                                               (55.6)
                                                                                                                                                                                                Russian
United States of                                                                                                                                        South Africa
                      France (5.9)                          India (23.1)                      India (8.6)         China (26.5)     Canada (18.1)                         China (20.9)          Federation
America (23.6)                                                                                                                                             (16.9)
                                                                                                                                                                                                 (21.12)
United Kingdom                                                                                                                                                            Guatemala
                     Australia (4.9)                        China (20.8)                    Australia (8.3)        India (12.2)      India (13.8)       Brazil (3.7)                         Canada (11.76)
     (12.1)                                                                                                                                                                (17.31)
 New Zealand          United Arab                                                           Czech Republic
                                                           Uruguay (4.1)                                         Thailand (3.4)      China (6.6)       Thailand (2.8)    Singapore (8)       Brazil (11.15)
      (9.5)          Emirates (3.5)                                                              (5.1)
                                                                                                                                      Russian
  Netherlands                                                                                                                                            Indonesia         Viet Nam
                      Brazil (1.5)                         Thailand (2.5)                   Denmark (3.5)        Malaysia (1.6)      Federation                                             Ukraine (10.15)
     (7.8)                                                                                                                                                 (2.1)            (5.74)
                                                                                                                                        (3.2)
                                                                                                                  Netherlands                                              Myanmar           United States of
 Malaysia (6.0)      Malaysia (0.4)                       Netherlands (2.2)                  Ireland (2.3)                         Myanmar (3.2)        India (1.9)
                                                                                                                     (1.4)                                                  (3.92)           America (6.81)

  Product: 11                                                     Product: 15                                                         Product: 19
Products of the                Product: 12                   Animal or vegetable                                                    Preparations of           Product: 20
                                                                                        Product: 17              Product: 18                                                              Product: 22
milling industry;    Oil seeds and oleaginous fruits;       fats and oils and their                                                  cereals, flour,        Preparations of
                                                                                      Sugars and sugar         Cocoa and cocoa                                                        Beverages, spirits and
 malt; starches;     miscellaneous grains, seeds and          cleavage products;                                                    starch or milk;     vegetables, fruit, nuts or
                                                                                       confectionery            preparations                                                                vinegar
 inulin; wheat       fruit; industrial or medicinal ...      prepared edible fats;                                                   pastrycooks'         other parts of plants
     gluten                                                        animal ...                                                          products

Thailand (41.06)     United States of America (72.56)         Indonesia (49.3)         Brazil (90.86)          Malaysia (24.29)      India (36.01)            China (19.83)              Singapore (41.89)
                                                                                                                                                                                      United Arab Emirates
   India (19.2)               Canada (6.89)                   Argentina (25.44)         India (3.83)             India (21.4)      Denmark (16.51)      United Kingdom (12.03)
                                                                                                                                                                                             (18.46)
 Germany (8.05)                Brazil (5.17)                    Malaysia (12)           China (2.02)           Singapore (15.05)    Belgium (11.54)         Belgium (10.69)              Belgium (6.47)
 Pakistan (7.45)               India (2.65)                     Brazil (7.51)         Germany (0.41)           Indonesia (7.73)     Australia (8.58)        Thailand (10.07)             Netherlands (3.65)
Korea, Republic of
                        Russian Federation (1.75)              Paraguay (4.5)         Malaysia (0.38)           Turkey (6.92)        Malaysia (5.2)          Singapore (9.2)         United Kingdom (3.62)
     (3.37)
                                                                                                                 United Arab                            United States of America
  China (2.39)               Australia (1.74)                   China (0.21)          Australia (0.37)                              Thailand (4.75)                                        Thailand (3.4)
                                                                                                                Emirates (5.23)                                  (7.37)

     CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                                                                    40
Major Sources of Import of Intermediate
                                     Products, Machineries & Others

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   41
Major Sources of Import of Intermediate
                              Products, Machineries & Others (Cont.)

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   42
Domestic Production of
                                                                                   Agricultural Products
450                                                                                                                                         25.0

400                                                                                                                  21.1
                                                                                                                                            20.0
350                                                                  17.9
                                                                              14.4                                                          15.0
300                                                                                                       12.9
250      9.3                                                                                                                                10.0
                                   8.4                                                                                                7.7
                                                                                       7.4
200              5.8                                                                                                                        5.0
                          3.6
150                                                          1.8                                2.1
                                                     1.0
                                                                                                                                            0.0
100                                          -1.4
                                                                                                                                            -5.0
 50                                                                                                                          -6.7
 0                                                                                                                                          -10.0
      Aman     Aus     Boro     Wheat    Potato Veg (w) Veg (s) Soy bean Lentil    Lentil    Onion    Ginger     Garlic Tarmaric Chilli
                                                                          (M)     (Total)

                                  FY2018-19 lakh m ton         FY 2019-2020 (T) lakh m ton            % change

• According to the DAE, production of major agricultural products during FY2020 is
  likely to be higher compared to that in the last year (FY2019)
    • Figure shows that all types of rice, wheat, vegetables, soy bean, lentil, onion
       garlic & chili have been targeted to produce at a higher level in the current year
       compared to that in the previous year
    • Production of potato and turmeric may produce less in this year.

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                              43
Public Food Stock

 Food reserve under the PFDS is higher in FY2020 compared to that in FY2019
     Until March 15 2020, the government had the reserves of food grains,
      especially rice and wheat, at 17.62 lakh m tons, which is about 1.85 lakh m
      tons higher than the same period of the last year
     As of 18 March, 2020, total public food stock is 17.4 lakh ton of rice & 3.19
      lakh ton of wheat
 Import of rice and wheat has been ongoing during FY2020
   Till March 12, 2020 about 51.79 lakh m. tons of food has been imported of
      which wheat is 51.74 tons and rice is 4000 tonnes
 Government has taken preparation for ensuring available supply of some of
  products specially need during Ramadan season (to be started end of April, 2020)
     In the first eight months (July-February) of FY2020, the import of chickpea
      through Chittagong port has been estimated to be 199471 tons
     According to the Ministry of Commerce, the demand is around one and a half
      million tonnes

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                  44
Businesses and Employment

 Business and employment would confront adverse impact if economic
 activities need to shut down in case the coronavirus outbreak in the country
   Service sector related enterprises would be affected more which include
     hotel & restaurants, wholesale and retail; trade and banks, insurance and
     financial services
   Impact would be higher in small scale enterprises and those operate
     informally for not having any contingency plan
   Manufacturing sector particularly export-oriented RMG and textiles
     industries would be affected most
 Workers usually work under temporary contractual arrangement particularly
 those work in small scale and informal enterprises would be affected most.
   Workers who work in labour-intensive formal and export-oriented
     industries would be adversely affected

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   45
Supply Chain Risks in Bangladesh

 The domestic supply chains are at different levels of risks at the current state
  of outbreak of coronavirus. However, levels of risks across all sectors will rise
  cumulatively in case the virus outbreak intensifies
   Most of the supply chains in the agriculture sector are at stable state with
      minor adversity in supplies and prices
   Most of the domestic market-oriented manufacturing supply
      chains have partially affected both in supplies and prices due to
      disruption in import of raw materials from China
   Main export-oriented manufacturing supply chain, RMG has been
      gradually affected at higher levels with withholding/lowering/withdrawing
      orders at different levels and finally at the risk of closing down of factories.
      Other export-oriented industries/products (leather, pharmaceuticals
      and agro-processed products) have got affected

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations     46
Supply Chain Risks in Bangladesh

   Most affected sectors both at present and possibly in the future would be
     service sector & related activities. Tourism/travel is the most affected
     sector which include airlines, hotels, restaurants, MICE and tour
     operators. Other service sectors/activities such as wholesale/retail
     trading, shops and transport are being affected at different levels
 Key adverse impact would occur in the form of possible health hazards of
 workers, demand shock, supply shock of raw materials, intermediate
 products, machineries, difficulty in repaying loan, lack of financing facility in
 flexible terms, temporary shut down of operation and closed down of
 factories/businesses

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   47
Section 4.3:
                                        Healthcare

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   48
Response of the Government of Bangladesh

 At present, passengers returning from countries highly
  affected by COVID-19 are being screened using
  rudimentary tools, such a thermometer or thermal
  scanner
   Those who are displaying known symptoms of
      COVID-19 are being isolated in hospitals
   Those who are not showing any signs of the disease
      are being advised to ”home quarantine” for two weeks
      Unfortunately, it cannot be assessed if the
        returning passengers are taking such advice
        seriously since there is no monitoring or
        enforcement mechanism
      In fact, COVID-19 entered Bangladesh through
        returning migrant workers from Italy, and is now
        spreading exponentially
      Moreover, in the initial stages of the disease,
        COVID-19 can be present inside a person’s body
        without showing any visible signs

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   49
Response of the Government of Bangladesh
                                                            (cont.)

 A directive was given by the Honorable Prime Minister to avoid mass
  gatherings (Dhaka Tribune, 10 March, 2020)
 Restriction was imposed on public transport movement at some places in
  Madaripur’s Shibchar upazilla (Daily Star, 20 March, 2020)
 Most shops, including cosmetics, furniture and electric appliances, in
  vulnerable areas were closed down, but markets of daily necessities would
  remain open (Daily Star, 20 March, 2020).
 Leaves of all health sector officials were cancelled by the government (Daily
  Star as of 20 March, 2020)
 DGHS ordered 1 lakh kits developed by Gonoshasthaya Kendro that can
  detect a COVID-19 case within minutes (Daily Star, 20 March, 2020).
 Army has been given the charge of running the two quarantines: Ashkona
  Hajj Camp near the Hazrat Shahjalal International Airport, and Rajuk
  Apartment Project near Diyabari of Uttara-18 (Daily Star, 20 March, 2020).
  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   50
Response of the Government of Bangladesh
                                                           (cont.)

 Tongi ijtema gorund will be readied to gear up the further quarantine
 facilities (Daily Star, 20 March, 2020).
 All bus services between Dhaka and Rajshahi have been cancelled (Daily Star,
 20 March, 2020)
 Health ministry received an allocation of taka 200 crore in additional funds
 for the treatment of the patients (Daily Star, 20 March, 2020)
 DNCC formed a committee to take steps to ensure home quarantine (Daily
 Star, 20 March, 2020)
 The DNCC committee declared closure of all of its community centers to
 avoid mass gatherings (Daily Star 20 March, 2020)
 Mobile court would be set up to ensure the home quarantine (Daily Star, 20
 March, 2020)

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   51
Responses of Other Governments to COVID-19

                                                                         ITALY
                    CHINA                                 (35713 cases: 2978 deaths)*
                                                                                                                              SPAIN
      (81174 cases; 3242 deaths)*                                                                               (13716cases; 598 deaths)*
                                                          Entire country operating under a
                                                                                                                    Emergency lockdown;
                                                           “red zone”, schools, shops and
      Aggressive quarantine, public                                                                              nationalisation of all private
                                                          restaurants closed, sports events
     monitoring & city-wide lockdown.                                                                                      hospitals
                                                                     cancelled.                                    (Business Insider, 16 March 2020)
           The Guardian, 9 March 2020)
                                                                  (REUTERS, 16 March 2020)

        SOUTH KOREA                                                                                                  GERMANY
                                                                   FRANCE                                   (8198 cases; 13 deaths)*
     (8413 cases; 84 deaths)*                          (9043 cases; 244 deaths)*
  Large scale home quarantine, set-                                                                           Tax relief given to firms,
                                                      Countrywide lockdown; military                       government-level assistance to
   up of drive-through screening                       and police deployed to ensure
    clinics, subsidisation of small                                                                        impacted firms, cancellation of
                                                         people do not leave house.                                public events.
                 firms.                                        (CNBC, 17 March 2020)
  (The Wall Street Journal, 16 March,2020)                                                                  (The Berlin Spectator, 18 March 2020)

                        IRAN                                                                                                     UK
                                                                            USA                                  (2630 cases; 103 deaths)*
         (17361 cases; 1135 deaths)*                        (7087 cases; 100 deaths)*
           Public gatherings cancelled,                                                                            Schools closed and exams
                                                               Free COVID-19s testing,
         international flights to Europe                                                                         cancelled, strict limitations on
                                                                 increased benefit for
          banned, citizens asked to stay                                                                       the mobility of people, work from
                                                             unemployed, paid leave, etc.
                      home.                                       (abc News, 19 March, 2020)
                                                                                                                   home policy encouraged.
              (Al Jazeera, 18 March 2020)                                                                                (BBC, 19 March, 2020)

  *Statistics given are number of total COVID-19 cases and total deaths respectively taken from Situation Reports of WHO., as per 19 March, 2020)

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                           52
Rapid Escalation of COVID-19 in Italy in 5 Days

                                                                                                          11 Mar 2020
 On 20 March 2020, death toll rose                                                   9 Mar 2020             Stage 6
  to 3405, the highest in the world
                                                                8 Mar 2020             Stage 5             10149 cases;
                                                                                                            631 deaths
                                           7 Mar 2020             Stage 4             7375 cases;
                                                                                      366 deaths
                      22 Feb 2020            Stage 3             5883 cases;
                                                                 234 deaths
 11 Feb 2020           Stage 2              4636 cases;
                                            197 deaths           Healthcare               Entire          Quarantine is
   Stage 1               9 cases;
                                                                   system               country is           imposed,
                         0 deaths        Cases double
    3 cases;                                                   collapses due           under self-             most
                      Number of            in a day &
    0 deaths                                                     to surge in             imposed            businesses
                      cases rise &          there are
                                                                cases & lack           quarantine,          are closed,
   First few        some regions         more deaths;
                                                                of resources;             but all         people found
cases appear;             are              schools &
                                                                    some               businesses             outside
people feel          quarantined;         universities
                                                                people are            are still open      without valid
it’s nothing         people still        are closed but
                                                               left to die as          and some             reason are
  to worry             continue               other
                                                                 treatment            people are           fined €206,
 about and          life as usual          businesses
                                                                   must be                 still          while COVID-
some believe         and feel only       remain open,
                                                                  provided            continuing            19 patients
it’s only a flu       the elderly        while 10,000
                                                                selectively—         life as usual        found outside
                       are at risk       escape from
                                                                   war-like                                 are jailed
                                         quarantine
                                                                  situation
  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations Source: Situation reports, WHO       53
Bangladesh’s Preparedness:
                                   Healthcare Infrastructure & Equipment

                                                                       every 1,196 persons

 1 hospital bed

                                                   for

                                                                  Source: Directorate General of Health Services (DGHS), 2017
                                                                                                                           54
CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations
Bangladesh’s Preparedness:
                                  Healthcare Infrastructure & Equipment

        Among the healthcare facilities in Bangladesh,

 5.1% have             21.5% have                                        28% have all 34.5% have
                                    27.5% have
emergency                alcohol-                                           basic     lab facilities
                                     medical
 transport                based                                           equipment
                       disinfectant   masks

43.1% have             55.1% have 83.7% have   86.3% have 90.1% have
 regular                soap and                           improved
                                  paracetamol thermometer
electricity              water                               water
                                      oral                  source
                                               suspension
                                                                          Source: Bangladesh Health Facility Survey 2017 55
CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations
Bangladesh’s Preparedness:
                                                                Healthcare Personnel

                              1 registered physician

                                                        for
                                  every 1,581 persons

CPD (2020): Health and Economic Risks of Corona Pandemic and RecommendationsSource: Health Bulletin 2018, DGHS   56
Bangladesh’s Preparedness:
                                                                                   Healthcare Personnel

            Among the healthcare facilities in Bangladesh,

            28%                                                      59.1%                                                         79.7%
             have
          specialistsi                                         have general                                                   have nurses
                                                              practitionersii
Source:      Bangladesh Health Facility Survey 2017
Note:        i) Specialist (consultant) medicine [including cardiology], specialist (consultant) general surgery, specialist (consultant) obstetrics/gynecology,
             specialist (consultant) pediatrics, specialist (consultant) psychiatry, specialist (consultant) anesthesia or any other specialist not listed above
             ii) Medical officer (MBBS) (any non-specialist doctor, including assistant surgeon, emergency medical officer (EMO), indoor medical officer
             (IMO), maternal and child health/family planning medical officer (MCH/FP), residential medical officer (RMO), regardless of designation or
             title) or medical officer—anesthetist or dental surgeon.

   CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                          57
Longstanding Problems of Healthcare:
                                       Poor Budget Allocation for Health
• Total allocation of the budget for health                                                      Health budget: as Share of GDP
  sector in FY20 was Tk.25733 crore which                           7.0                                                                                                                      1.0
  has increased by 15.2% over that of                               6.0
                                                                                                                                                                                             0.8
                                                                    5.0
  RBFY19

                                                           Budget
                                                                    4.0                                                                                                                      0.6

                                                                                                                                                                                                   GDP
                                                                    3.0                                                                                                                      0.4
      • Allocation for health as share of                           2.0
                                                                                                                                                                                             0.2
        total budget has fallen (from                               1.0
                                                                    0.0                                                                                                                      0.0
        5.1% in BFY19 to 4.9% in BFY20)

                                                                                                 FY12

                                                                                                           FY13

                                                                                                                  FY14
                                                                                          FY11
                                                                                 FY10

                                                                                                                           FY15

                                                                                                                                               FY17

                                                                                                                                                         FY18
                                                                                                                                     FY16

                                                                                                                                                                 FY19

                                                                                                                                                                                 FY20
                                                                                                                                                                        RBFY19
      • Since 2017, share of health budget
        as% of GDP remain at 0.9% level                                                                   % of Budget (total)                           % of GDP

• Government budget for health (as a                                  Health budget: Per capita allocation (nominal & real)
  share of GDP) is considerably lower                                                (BFY 2010-BFY2020)

  than the targets stipulated in the                      1,800
                                                                                                                                                                                              1,537
                                                          1,600                                                                                                         1,412 1,349
  7FYP and WHO benchmark                                  1,400                                                                                                 1,262
                                                                                                                                                      1,081
      • 7FYP target: 1.12% of GDP: WHO
                                                          1,200
                                                          1,000                                                                             794                          771                   795
        target: 5% of GDP                                   800
                                                                                        543
                                                                                        490
                                                                                                 585
                                                                                                 485
                                                                                                          607      608
                                                                                                                             706
                                                                                                                             480            510
                                                                                                                                                       658
                                                                                                                                                                726                698

                                                            600           472                             472      440
 Per capita allocation for health sector (in               400

   nominal terms) has slightly increased                    200
                                                              0
   (from Tk.1349 in RBFY19 to Tk.1537 in
                                                                          FY10

                                                                                                                              FY15

                                                                                                                                                       FY17
                                                                                                 FY12

                                                                                                           FY13

                                                                                                                    FY14

                                                                                                                                            FY16

                                                                                                                                                                          FY19
                                                                                        FY11

                                                                                                                                                                                    RBFY19
                                                                                                                                                                 FY18

                                                                                                                                                                                               FY20
   FY20) but the rise is much lower in real
   terms (less than Tk.100).                                                                            Per capita nominal                            Per capita real

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                                                                58
Longstanding Problems of Healthcare:
                                   High Out-of-pocket Healthcare Expenditure
 The health system of Bangladesh relies heavily on the government for financing and setting overall policies and
   service delivery mechanisms.
 Although the health system is faced with many intractable challenges, it seems to receive little priority in terms
   of national resource allocation.
 The health system faces multifaceted challenges
     Lack of public health facilities, scarcity of skilled workforce, inadequate financial resource allocation and
         political instability
 Government expenditure on health is only about 34% of the total health expenditure, the rest
  (66%) being out-of-pocket expenses.
 Out-of-pocket expenditure on healthcare in Bangladesh is the highest in South Asia.

                          Table 11.2: Out-of-pocket health expenditure in South Asia
Indicator                                                2008      2009       2015                                     2015
                                                                 Bangladesh              India       Pakistan        Sri Lanka        Nepal       Bhutan
Out-of-pocket expenditure
                                                          67.2      67.2       71.8       65.1          66.5             38.4          60.4          19.8
(% of current health expenditure)

Out-of-pocket expenditure, per capita PPP
                                                          36.2      39.0       63.2      143.4          88.9            226.9           91.1         56.9
(current international $)
Source: World Health Organization Global Health Expenditure database. (http://apps.who.int/nha/database). Accessed on 25 November 2018.
Note: Out-of-pocket expenditure per capita, PPP (current international $) is defined as Health expenditure through out-of-pocket payments per capita in
international dollars at purchasing power parity (PPP).

   CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                           59
Longstanding Problems of Healthcare:
                                       Poor Utilisation of Health Budget
 Utilisation of the overall health budget has been                               Level of Budget Utilisation

  decelerating in recent years and it was lowest in       30,000                                                                                         105

  FY2018 (83.7%) during the last ten fiscal years.        25,000                                                                                         100
                                                          20,000                                                                                         95
• A detailed description on different activities of the
                                                          15,000                                                                                         90
  health sector has been mentioned in the budget
                                                          10,000                                                                                         85
  document
                                                            5,000                                                                                        80
     • Most of those are either ongoing or                        0                                                                                      75
       completed projects

                                                                                             FY13

                                                                                                                   FY16

                                                                                                                                 FY18

                                                                                                                                        FY19
                                                                               FY11

                                                                                                    FY14
                                                                        FY10

                                                                                      FY12

                                                                                                                                               FY20
                                                                                                            FY15

                                                                                                                          FY17
     • New projects include: Three nursing colleges
                                                                         Allocation                 Expenditure                   Utilisation
       and five nursing hostels for boys will be
       established in FY2019-20; Institutes of                           Status of Completion of ADP Projects
                                                          Name of the Project                              Tenure             ADP              Maximum
       Nuclear Medicine and Allied Sciences                                                                                Allocation           possible
                                                                                                                           for 2019-           completio
       (INMAS) will be established at the campuses                                                                            2020             n by FY20
       of 8 medical college hospitals.                                                                                     (In Crore              (%)
                                                                                                                              Tk.)
• From ADP projects, 14 projects are selected on          3rd EDCL Industrial branch                   12/31/2020              173                    93.7
                                                          establishment at Gopalganj
  the basis of Tk.100 crore and projects to be            Establishment of Sheikh Sayera               6/30/2020                 137              100.0
                                                          Khatun Medical College & Nursing
  finished by FY19-21 .                                   Institute (1st Revised)
                                                          Establishment of patuakhali Medical          6/30/2020                 150                  43.9
• Most of the projects are behind schedule in             College & Hospital
  terms of level of implementation.                       Urban Public & Environmental Health          6/30/2020                 104                  31.1
                                                          Sector Development Project (Revised)
                                                          Expansion of National Institute of           12/31/2020                115                  34.8
                                                          Neurosciences & hospital
  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                                         60
Section 4.4:
                                  Public Finance

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   61
Public Finance

Public Finance
 Inability to deliver on the planned budgetary targets in an efficient way has
  continued in FY2020 – weakening state of macroeconomic management
 As per MoF data, during the first six months (Jul-Dec) of FY20, majority of
  the fiscal parameters apart from ADP will fall well short of their
  respective targets
    Table: Fiscal framework
                                                                     Growth (%)
    Component                                 Target Actual          Target Jul-Dec Required Jan-
                                               FY19    FY19          FY20     FY20     Jun FY20
     a. Total revenue                            56.7    16.3           50.0      5.6         87.5
     a.1 Tax revenue                              57.4    16.3           50.5      5.6        86.9
      a.1.1 NBR tax                               58.3    16.8           48.9      5.9        83.5
      a.1.2 Non-NBR tax                           34.7     1.6           97.5     -1.5       198.8
     a.2 Non-tax revenue                         50.0     16.6           45.5      5.4        94.4
     b. Total expenditure                        44.3    21.7           33.6    16.5          41.7
     b.1 ADP expenditure                          44.7    23.3           37.5    32.4         38.8
     b.2 Non-ADP expenditure                      44.1   20.8            31.2    11.6         44.0
     c. Overall deficit (excl. grants)           19.0    32.8             4.0  128.3          -7.0
  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                       62
Public Finance

Revenue mobilisation
 CPD, in its previous IRBD exercise, identified revenue mobilisation as one
  of the four major stress points which require immediate policy attention
 Total revenue-GDP ratio in FY2019 was merely 9.9%; while the tax-GDP
  ratio was only 8.9%
    Marginal improvement from FY18 but still considerably lower than
       the level achieved in FY2012 (Total revenue-GDP ratio of 10.9%)
 Revenue shortfall in FY2019 was Tk. 87,402 crore
    Regrettably, it surpassed CPD’s projection of Tk. 85,000 crore
 As per MoF data, during Jul-Dec of FY2020, total revenue collection
  growth was only 5.6% over the corresponding period of FY19
    Relevant growth target for the full FY2020 was 50.0%; total revenue
       collection would have to increase by an unprecedented 87.5%
       during Jan-Jun of FY2020
CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               63
Public Finance

 If the ongoing trend continues, total revenue shortfall in FY20 is may
  reach BDT 100,000 crore (based on projection using MoF data)
 Uncertainty in the global economy and consequent repercussions for
  Bangladesh economy may create added pressure on revenue mobilisation
  during the remainder of FY20 and beyond:
    Downturn in trade, particularly that of import values (both price and
       quantity effect), may result in considerably lower collection of revenue
       from customs duty, VAT and SD at the import stage
    In view of the added uncertainty and increased medical expenditure in
       case of a massive outbreak and job loss and lower income, particularly
       in the informal sector, household may also spend less  a prolonged
       epidemic may result in a slump in business activities which in turn
       could trigger lower collection of VAT, SD and income (both corporate
       and personal) tax at the local stage

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               64
Public Finance

Public Expenditure
 Non-development expenditure during Jul-Dec of FY20 was characterised by a
 moderate growth in subsidies (45.8%), pension and gratuities (37.5%), and
 foreign interest payments (27.4%)
 Subsidies and incentives started skyrocketing from October 2019 (365%
 growth in October FY20 over October FY19)
   Introduction of 1% cash incentive for the RMGs export and 2% cash
     incentive for remittance senders contributed to this strong growth in
     subsidies (both were effective from October 2019)
   Bangladesh Bank in a recent circular (FE circular 08, 11 Mar 2020) further
     extended 2% cash incentive on remittance to Bangladeshis working at the
     United Nations, other global agencies abroad, and shipping and airline
     companies owned by Bangladeshi or foreigners (but not the Bangladesh
     government) – will raise subsidy burden further!
 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               65
Public Finance

 After eight months of FY2020, government should have at least about Tk.
 1,900 crore at hand from its subsidy amount even if it had exhausted all of it’s
 promised allocation of Tk. 2,825 crore and Tk. 3,060 crore for export and
 remittance cash incentives
   Following the declining trend of RMG export growth and speculative decline of
     remittances in the coming months due to COVID-19, GoB may have some fiscal
     cushion from the subsidy allocation for these sectors during the next four months
     of FY20 compared to the programmed amount
 Falling oil prices in the international market in the aftermath of COVID-19
 and oil-war between Saudi Arabia and Russia has provided opportunity to
 BPC to make hefty profits and may provide some fiscal cushion to GoB
   BPC made a profit of Tk. 10,741 crore during FY2016 and FY2017 oil price slump
     which allowed it to pay Tk 2,200 (21% of total profit) to the government exchequer
     as dividend
   BPC is currently making a profit of around Tk. 23 crore per day since late Feb 2020

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               66
Public Finance

 According to IMED, during Jul-Feb ministries and divisions could spend
 38.5% of the originally planned allocation of Tk. 202,721 crore for ADP
 FY2020 – lower than the corresponding figures of FY19 (38.8%)
 Lower utilisation (35.5%) of foreign aid (lower than both FY18 and FY19 for
 the corresponding period) is a worrying sign in this regard
   Slow project aid utilisation by
       Roads and Highways Division (e.g. Dhaka Metro Rail project),
       Ministry of Railway (e.g. Padma Rail Link Bridge),
       MoST (e.g. Rooppur Project)

   As per proposed RADP for FY2020, it was slashed by Tk. 9,800 crore (or
     4.8%) to bring the size down to Tk. 192,921 crore. Project aid component
     was reduced by Tk. 9,800 crore (or 13.6%) while local resources (Taka)
     component remained the same
 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               67
Public Finance

 China is currently co-financing or implementing about 13 projects in
 transport and power sectors
   The surge of COVID-19 has already slowed down the pace of some of these
     key projects such PMPB project, Padma Bridge Rail Link, Construction
     work of Dhaka-Ashulia elevated expressway, Construction of Joydebpur-
     Ishwardi Dual-Gauge Railway Line, Construction of Multilane Road
     Tunnel under River Karnaphuli
   This coupled with slow pace in other foreign aided projects may affect the
     implementation of the overall ADP in FY2020

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               68
Public Finance

Budget Deficit and Financing
 As CPD had suspected earlier, deficit crossed the threshold of 5% (5.5% of
 GDP) for the first time in FY19
 A significant revenue shortfall coupled with relatively higher public
 expenditure growth in the early months may result in even higher overall
 deficit financing by the end of FY20 compared to FY19
   As per MoF, the overall deficit recorded a 128% growth during Jul-Dec of
     FY20 which is already 17.7% of annual target
   Lower subsidy demand in some cash incentives and lower utilisation of
     project aid in mega projects may lower the overall expenditure at the end
     of FY20.
   However, as per the current trends in revenue collection and
     public expenditure, deficit may increase to 5.5% of GDP in FY20
   Depending on the extent of COVID-19 and associated costs and
     policy measures, this may rise further
 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               69
Public Finance

 Deficit financing was characterised by low net intake from foreign financing
 sources as against a heavy reliance on domestic financing sources
 Within domestic financing structure, high bank borrowing was the key
 contributor in FY20 unlike previous fiscal years; the role of non-bank
 borrowing was rather limited
   Net borrowings from banking sources during Jul-Dec of FY2020 is already
     about 66.0% of the annual target for FY2020 according to MoF data
     (94.9% according to Bangladesh Bank data)
 Deterioration in the utilisation of foreign resources in FY19 was a worrying
 sign which also continued in FY2020 and may further exacerbate due to
 COVID-19
   Net foreign borrowing registered 22.1% growth in FY2019 (119.8% in
     FY2018)
   It recorded (-)47.8% growth during Jul-Dec of FY2020
 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations               70
Section: 4.5
                                 Monetary Policy

CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations   71
What is the Standard Monetary Policy
                                                     During Such Crisis?

 During such crisis when private consumption demand is depressed
 and the risk of unemployment and income instability is high the
 objective of monetary policy is to increase liquidity situation in the economy
 Quantitative easing at the time of COVID-19 pandemic is a major option to
 do so
   This means injecting liquidity into financial institutions to give space for
     functioning through purchase of treasury bonds and bills, and cutting
     interest rates
   Several countries have already taken a number of targeted measures

 Source: IMF Blog (11 March, 2020). Monetary and Financial Stability during the Coronavirus
 Outbreak.      https://blogs.imf.org/2020/03/11/monetary-and-financial-stability-during-the-
 coronavirus-outbreak/

 CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations             72
Global Monetary
                                                                    Response to COVID-19
Central                                                      Measures
Banks
The People’s   100 billion Yuan injected into the market through medium term lending
Bank of China  facility & 550 billion Yuan long-term funds will be injected through the cut
               in reserve ratio
Reserve Bank   6-month dollar/rupee swap & Long-Term Repo Operations (LTRO) of up to
of India       Rs 10 billion for liquidity boost
The Federal    Interest rate cut to near 0% from 1.25% and injecting liquidity by purchasing
Reserve System $700 billion bond
(USA)
Bank of Canada Injection of $10 billion for businesses & interest rate cut to 0.75% from
               1.25%
Bank of        Interest rate cut to 0.75% t0.25%
England
European       Bond purchase of 120 billion Euro; interest rate -0.5%
Central Bank
The Bank of    80 trillion yen set as upper limit for purchasing government bond. Banks
Japan          would purchase exchange-traded funds of 12 trillion yen & investment funds
               tied to Japanese real estate of 180 billion yen

  CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations          73
Bangladesh Bank’s Recent Measures:
                                                                                  Business-as-usual?

On the premise that borrowers may find it difficult to repay loans
    during a time when the world economies including Bangladesh
    economy are anticipated to be adversely affected by COVID-19,
    Bangladesh Bank issued a circular and a circular letter on 19 March
    2020 announcing that:
      Loans that were classified on 1 January 2020 cannot be moved
       to a lower category of classification until 30 June 2020
      Loans that have benefitted from special rescheduling and one time exit
       policy have to be categorized under special mention accounts (SMA)
 Are these measures simply a continuation of the benefits
 that are being offered to loan defaulters since May 2019?
Or, are these genuine measures taken to support the genuine victims
 due to the threat of COVID-19?
 Bangladesh Bank needs to ensure transparency in offering of such
 benefits to the truly the affected ones.
Source: BRPD Circular No. 04: Loan Classification; BRPD Circular Letter No. 07: Special Policy on Loan Rescheduling and One Time Exit

    CPD (2020): Health and Economic Risks of Corona Pandemic and Recommendations                                                        74
You can also read
Next slide ... Cancel